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Singapore’s Core Inflation Dips to 0.5% in July

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TL;DR

  • In July 2025, Singapore’s core inflation (excluding housing and private transport) eased to 0.5% YoY, down from 0.6% in June.
  • Meanwhile, headline CPI slowed to 0.6% YoY, down from June's 0.8%.
  • On a monthly basis, overall CPI fell by 0.4%, reflecting lower prices in retail goods, electricity, gas, and accommodation, signalling easing inflationary pressures.

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High-Cost Pressures Ease in July

Singapore’s inflation trajectory showed a marked easing in July 2025, with both core and headline measures coming in below expectations. These softer numbers reflect relief for consumers and policymakers alike, as several key cost components—including energy, retail items, and housing—eased meaningfully.

1. Core and Headline CPI: Putting the Numbers in Context

  • Core inflation, which strips out volatile housing and private transport components, decelerated to 0.5% YoY—the lowest since March—dropping from 0.6% in June.

  • Headline CPI (CPI-All Items) rose 0.6% YoY, down from 0.8% in June.

  • Monthly movement: Overall CPI declined 0.4% month-on-month, signalling a short-term deflation in consumer prices.

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2. Sector Breakdown: What’s Driving the Easing?

Several categories stood out in pulling inflation lower:

Category Year-on-Year (%) Change from June Key Drivers
Electricity & Gas –5.6% Down from –3.9% Lower tariffs on electricity and gas
Retail & Other Goods –0.5% Price declines Cheaper clothing, footwear, home appliances
Accommodation 0.5% Down from 1.0% Lower housing maintenance/rent costs
Food 1.1% Slight rise Higher prices for food services and raw food
Private Transport 2.1% Slight rise Higher vehicle prices
Services Unchanged Sector mixed Offsetting changes in medical and holiday

(Source: MAS & MTI — data via CNA, Reuters, Business Today)

Insights:

  • Energy costs: The drop to –5.6% reflects tariff cuts and possibly the impact of subsidies or rebates.

  • Retail goods: Declines in clothing, footwear, and appliances contributed to more negative retail inflation.

  • Housing: Slower growth in accommodation costs softened inflation.

  • Modest upward pressure: Slight rises in food and private transport weigh marginally against the broader disinflationary trend.

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3. Significance for Consumers and Economy

Lower inflation helps ease living costs—especially energy and housing—for households. Businesses may also benefit from modest input cost relief, though segments like food services and car dealerships may still feel cost pressures. Overall, this sets a more comfortable near-term environment for policymakers considering monetary and fiscal settings.

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4. Forward Outlook: Balanced Risks Ahead

The Monetary Authority of Singapore (MAS) and Ministry of Trade and Industry (MTI) emphasise a balanced outlook:

  • Downside factors include easing global oil and food prices, weak demand, and continued government support through subsidies.

  • Upside risks remain—especially geopolitical shocks that could elevate imported energy and shipping costs.
    Current forecasts peg both core and headline inflation at 0.5–1.5% for 2025, unchanged from prior guidance.

5. Broader Policy Context

MAS continues to manage inflation primarily via its exchange‑rate‑based policy approach (S$NEER), rather than interest rates. The bank maintained its settings in July, having already eased twice earlier this year amid slowing growth and inflation.

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FAQ

Q1. What exactly is 'core inflation'?
A: It excludes accommodation and private transport costs to provide a clearer view of underlying inflation trends, decoupled from volatile housing and vehicle prices.

Q2. Should businesses expect already-lowered prices to persist?
A: While energy and housing costs may remain subdued near-term, potential disruptions—such as renewed geopolitical tensions—could bring back inflation pressures.

Q3. Why does MAS target inflation via exchange-rate policy?
A: As a small, open economy, Singapore’s pricing and inflation are highly sensitive to import costs. Managing the S$NEER provides broader and smoother control over domestic prices.

Q4. What does this mean for SMEs and retailers?
A: Retailers may benefit from easing import costs, especially on goods and energy, but those in sectors like food and autos might still see cost upticks.

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Sources consulted:

  • Channel NewsAsia, Singapore’s core inflation edges down to 0.5 per cent in July as retail prices ease
  • Reuters, Singapore’s core inflation rises 0.5% y/y in July, lower than poll forecast
  • Business Today, Singapore’s Core Inflation Eases To 0.5% In July, Lowest Since March
  • MAS Monetary Policy Statement / Macroeconomic Review
  • Reuters, MAS eases monetary policy as U.S. tariffs threaten growth
  • Reuters, Singapore’s annual core inflation rate 0.6% in May, matching poll forecast

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